Bitcoin’s Bull Run: Key Factors Driving Prices Higher

Bitcoin is currently experiencing a significant upward trend.

There’s a strong possibility that its previous all-time records will be surpassed in the near future.

Four primary factors are likely to contribute to its rising price.

Market movements can often develop momentum without any dramatic triggers; the case for Bitcoin (CRYPTO: BTC) is particularly compelling as several elements align perfectly, potentially leading to remarkable outcomes.

Macro Forces at Play

Four macroeconomic forces, historically associated with major Bitcoin rallies, are resurging. When central banks increase liquidity in the financial system, that fresh capital typically gravitates towards riskier assets like cryptocurrencies. This liquidity makes investors more inclined to take chances, especially when safer investments have already become relatively costly.

Money Supply and Bitcoin’s Value

The global M2 money supply reached approximately $108.4 trillion in April, growing at a rate reminiscent of Bitcoin’s previous breakout in 2021. Generally, Bitcoin’s value lags behind liquidity changes by about three months.

Impact of the Dollar’s Weakness

As the value of the dollar declines, investors often look for assets like Bitcoin that are expected to hold or increase in value. The dollar index has depreciation of about 10% this year, marking its most substantial six-month drop since 1986. Fund managers have reported a significant decrease in their dollar holdings, as per a recent Bank of America survey.

Interest Rates Affecting Bitcoin

Interest rates play a crucial role in determining Bitcoin’s price. As yields from government debt instruments like U.S. Treasury bonds decrease, the cost of borrowing declines, prompting capital to flow into riskier assets in search of better returns.

Supply Dynamics Favoring Bitcoin

Bitcoin’s supply dynamics also create an environment favorable for achieving new all-time highs. The 2024 halving will cut miner rewards, reducing daily issuance to about 450 coins, with demand from institutional investors—especially through Bitcoin ETFs—outstripping this supply. Additionally, as profits rise, miners may sell even fewer coins, increasing the scarcity over time.

Conclusion: Long-term Outlook

The takeaway for long-term investors is to continue acquiring Bitcoin and prepare for its potential growth this summer and beyond. However, consider this: while Bitcoin is attracting interest, other investment opportunities exist as illustrated by the Motley Fool’s latest stock picks, which notably exclude Bitcoin.